In a crisp 10 page unanimous opinion, the US Supreme Court overruled the (unanimous) Federal Circuit decision. The US Supremes held that an “article of manufacture” need not be the end product as was claimed by Apple and agreed with Samsung that the article could be an intermediate product or a component !!!
“The Federal Circuit’s narrower reading of ‘article of manufacture’ cannot be squared with the text of §289. The Federal Circuit found that components of the infringing smartphones could not be the relevant article of manufacture because consumers could not purchase those components separately from the smartphones. […] But, for the reasons given above, the term ‘article of manufacture’ is broad enough to embrace both a product sold to a consumer and a component of that product, whether sold separately or not. Thus, reading ‘article of manufacture’ in §289 to cover only an end product sold to a consumer gives too narrow a meaning to the phrase.” (Emphasis added – see below for analysis).
The decision in many ways is instructive: writing style, size, discussion of the issues are all covered. Take note that the 10 page length is when there are 2″ margins on both sides. I am counting only the pages of the decision and not the 2 page summary. How I wish our courts embrace such practices. But that is matter for a different post.
Image: For illustration of components only and does not pertain to either Apple or Samsung.
Justice Sotomayor delivered the opinion of the nine and first analysed §289: “Whoever during the term of a patent for a design, without license of the owner, (1) applies the patented design, or any colorable imitation thereof, to any article of manufacture for the purpose of sale, or (2) sells or exposes for sale any article of manufacture to which such design or colorable imitation has been applied shall be liable to the owner to the extent of his total profit, but not less than $250 . . . .” 35 U. S. C. §289.
“Arriving at a damages award under §289 thus involves two steps. First, identify the “article of manufacture” to which the infringed design has been applied. Second, calculate the infringer’s total profit made on that article of manufacture. This case requires us to address a threshold matter: the scope of the term “article of manufacture.” The only question we resolve today is whether, in the case of a multi-component product, the relevant “article of manufacture” must always be the end product sold to the consumer or whether it can also be a component of that product. Under the former interpretation, a patent holder will always be entitled to the infringer’s total profit from the end product.”
“The term “article of manufacture” is broad enough to encompass both a product sold to a consumer as well as a component of that product. A component of a product, no less than the product itself, is a thing made by hand or machine. That a component may be integrated into a larger product, in other words, does not put it outside the category of articles of manufacture.” ….”While the design must be embodied in some articles, the statute is not limited to designs for complete articles, or ‘discrete’ articles, and certainly not to articles separately sold . .”).
“This reading is also consistent with 35 U. S. C. §101, which makes “any new and useful . . . manufacture . . . or any new and useful improvement thereof ” eligible for utility patent protection. Cf. 8 D. Chisum, Patents §23.03, pp. 23–12 to 23–13 (2014) (noting that “article of manufacture” in §171 includes “what would be considered a ‘manufacture’ within the meaning of Section 101”). “[T]his Court has read the term ‘manufacture’ in §101 . . . to mean ‘the production of articles for use from raw or prepared materials by giving to these materials new forms, qualities, properties, or combinations, whether by hand-labor or by machinery.’ ” Diamond v. Chakrabarty, 447 U. S. 303, 308 (1980) (quoting American Fruit Growers, Inc. v. Brogdex Co. , 283 U. S. 1, 11 (1931)). The broad term includes “the parts of a machine considered separately from the machine itself.” W. Robinson, The Law of Patents for Useful Inventions §183, p. 270 (1890).
Ramifications on SEPs and the SSPPU principle: This decision goes a long way in supporting the smallest saleble patent practicing unit proposition put forth by several US district court judges (In Re: Innovatio; Microsoft v. Motorola, D-Link v Ericsson, etc.) and even the Federal Circuit (D-Link v. Ericsson, Virnet X, etc.) Supporters of the Entire Market Value Rule may argue that the decision is limited to Designs and not general Patent law. However, the answer here is the reference of the court to Diamond v. Chakrabarty and to 35 U. S. C. §101. This reading refers to the term “manufacture” which includes components of an end product.
The term “article of manufacture” is broad enough to encompass both a product sold to a consumer as well as a component of that product. A component of a product, no less than the product itself, is a thing made by hand or machine. That a component may be integrated into a larger product, in other words, does not put it outside the category of articles of manufacture.”
This reading is also consistent with the scope of grant of a patent globally. If one looks at the patent laws, without exception, they are for claims and claims themselves are based on the specification / disclosure made. If the claim is to an encoder / decoder, then the royalty is limited to the encoder / decoder – and it does not matter if the encoder / decoder is used in a mobile phone / smart phone / feature phone / satellite phone or even a ship / satellite / aircraft.
One can only wish that our courts look to global decisions like these to interpret Indian patent law. If they continue the way they do – granting ex-parte injunctions, damages as demanded by patent owner, etc. then they deal a body blow to the Make in India program. The manner in which several cases are going on right now, I can foretell that the Delhi High Court will become a litigation hub and the preferred forum for resolving patent disputes in favour of patentees and against the detriment of consumers, and manufacturers.